Comments on: Are your chairman and CEO the same person?

By: Arthur Lipper

Arthur Lipper — Wed, 11 Sep 2019 00:12:52 +0000

An active and responsible Board represents the owners of the company for which the CEO is hired to manage, subject to Board direction and approval.
Unless the Board is in control of the company and CEO the investors will be captives of a personality and character who may or may not perform as the investors wish.
I also believe that investors would benefit from more active involvement of members of the Board of Directors if they were not absolutely protected by Directors and Officers insurance for decisions made. Directors should be well compensated for their efforts and acceptance of personal liability.

By: Ray Chan

Ray Chan — Tue, 10 Sep 2019 23:16:01 +0000

Dave
It is a great post, I concur completely.

By: Michael O'Daniel

Michael O'Daniel — Tue, 10 Sep 2019 19:51:04 +0000

I believe decision-making is the function of the CEO, in consultation with and/or with the approval of the Board. There can be a written understanding of which decisions require board approval — key hires/fires, expenditures above a certain $$ level — and which do not. Making decisions by committee is a recipe for disaster. I’ve seen situations where the loudest voice in the room (whose % of ownership could be far less than other board members) prevails, to the ultimate detriment of the company.

As to the CEO being a board member, of course that person should be. If the board is considering replacing the CEO, then the CEO must be recused from discussions re: continued employment. Obviously he or she should be given an opportunity to make his or her case, but the final decision would be the board’s.

Certainly open to other points of view on this matter…

And BTW the Chairman / CEO question is just as critical in the nonprofit world as in the private sector. A Chairman / CEO with his or her handpicked board can also be a recipe for disaster.

By: Dave Berkus

Dave Berkus — Tue, 10 Sep 2019 17:36:43 +0000

In reply to Ronald Soloman.

Ron,

Thanks for this. True of many companies and all companies after the founder-CEO has left for any reason. My bias toward the early stage came out in this post, where the founder is CEO. Your comment restores balance to this conversation.

Dave

By: Ronald Soloman

Ronald Soloman — Tue, 10 Sep 2019 17:35:35 +0000

No, the chairman heads the board of directors. The board of directors chooses the CEO.

By: Arthur Lipper

Arthur Lipper — Tue, 10 Sep 2019 17:33:30 +0000

The more basic question is “Should the CEO be a member of the company’s Board of Directors?”

One of the primary functions of a Board of Directors is to determine the efficacy of the CEO and to
take remedial steps if the board believes warranted.

The presence of one being judged is an impediment to the effective judging of the individual.

The role of the CEO is to implement the decisions of the Board of Directors as to the company’s mission, policies
and practices.The CEO is hired manage the business, not to decide the objectives or policies of the business.

The Board should call upon the CEO and others for information and advice, but not decision making.

Decision making is the function of the elected representatives of the owners of the business.

This is why in in closely held, privately-owned companies, it is more appropriate for there to be a Board of Advisors
assisting the CEO rather than a Board of Directors monitoring and supervising the CEO.